What do Americans call literature?

We call it the same thing you do.....

A fellow Brit answering here.

The language is "English", so regardless of where the subject is taught, it will always be known as "English Literature". If Americans study "English Literature", then they will not study American books, but English ones... studying American books in an English literature class would pretty much defeat the object of its self-explanatory title.

Courses that students take before college that teach literature along with grammar, spelling, vocabulary, etc. are usually called English or Language Arts. Classes that are mostly literature based maybe be called many different things. Here's an example from MIT's online course catalog: http://ocw.mit.edu/courses/literature/

If it's a lit course, it's called British lit or American lit, depending on what lit is included in the course.

Or a course might be called American Lit of the 19th Century, or British Lit of the Romantic Period.

They speak English so they will call it English.